CORRECTED-UPDATE 1-Denmark's ISS lifts guidance after contract wins

3 Min Read

(Changes company name to DSB from DSV in seventh paragraph)

COPENHAGEN, Aug 27 (Reuters) - Danish business services firm ISS increased its forecast for organic revenue growth this year after new contracts helped it to perform better than expected in the second quarter.

Its shares traded as much as 8.8 percent higher on the back of the forecast and well received quarterly earnings, enjoying their best day since the company listed in March 2014.

Chief Executive Jeff Gravenhorst told Reuters that the company had enjoyed “good success” with its Integrated Facility Services (IFS) division.

The IFS business is based on large contracts with multinational corporations for which ISS performs a range of services including cleaning, catering and maintenance at sites around the world.

“The demand rises continuously in that market, and we have a really good position in the market,” Gravenhorst said.

ISS has 510,000 employees around the world making it one of the largest private employers. Its rivals include companies like Sodexo, G4S and Securitas.

ISS has recently won contracts with fellow Danish companies Danske Bank and state railway company DSB and has started working this year on contracts won earlier with Vattenfall, Swisscom, UBS and Huawei.

“In our view, the strong Q2 results represent solid execution of the IFS strategy and further underpin the stability of the business and outlook for the year,” Nordea, which has a ‘buy’ recommendation on the share, said in a note to clients.

Group revenue grew organically by 4.8 percent in the quarter. The company said it now expects organic revenue growth of between 3.5 percent and 4.5 percent in 2015 from an earlier guidance of 2 to 4 percent.

Revenue from IFS rose by 10 percent in local currencies from the same quarter last year to 6.6 billion Danish crowns ($1.0 billion), a third of the group’s revenue.

Gravenhorst said that the Netherlands and Brazil remain the most difficult markets for the company.

“Our growth is too weak in the Netherlands, and the Brazilian macro economy is going through a difficult time now, and that also hits ISS,” he said.

Only around 1 percent of the company’s current business is in China. ($1 = 6.5845 Danish crowns) (Reporting by Teis Jensen, additional reporting Annabella Pultz Nielsen; editing by Sabina Zawadzki and Keith Weir)